Talking the talk

19 May 06
PETER RIDDELL | Tony Blair is busy, busy. The more he is under pressure over his future as prime minister, the more determined he is to show that there is a lot more for him to do in Number 10.

Tony Blair is busy, busy. The more he is under pressure over his future as prime minister, the more determined he is to show that there is a lot more for him to do in Number 10.

He wants to disprove David Cameron’s recent jibe about the government being paralysed by the feuding over the date of his departure.

At the most gimmicky, there is the ‘Let's talk’ consultation. This was launched at a bizarre event at which Blair and John Prescott sat at various tables talking with, as well as to, ‘social entrepreneurs’ about public service reform.

Apart from a few sound bites on the evening news bulletins from Blair about the need to change the criminal justice system, this was a completely pointless exercise.

More intriguing has been the publication of letters by Blair to Cabinet ministers after the reshuffle. This is the first time that secretaries of state have been set explicit public objectives, albeit in fairly general terms.

This is just the kind of performance setting which, of course, applies to most readers of this magazine in the public sector and, even nowadays, to journalists in the private sector. There is no hint, however, of linking ministerial salaries to the achievement of the objectives.

At the time of writing, seven letters had been sent: to Jack Straw, leader of the Commons; Lord Falconer, constitutional affairs; Patricia Hewitt, health; John Reid, Home Office; Ruth Kelly, communities and local government; Douglas Alexander, transport; and David Miliband, environment, food and rural affairs. Revealingly, Gordon Brown has not so far received one.

These letters are an indication of Blair’s intentions, rather than of his ability to carry through his programme. The key questions are whether controversial decisions can be taken and whether Blair still has authority in Parliament.

On the former, Blair and his allies still hope to resolve the future of civil nuclear power (a determination underlined in his CBI speech), local government, the replacement of the British nuclear deterrent, etc.

The first key test has been pensions, in the light of the well-publicised divisions between Blair and Brown over the recommendations of the independent commission chaired by Adair Turner, the former CBI director general, now Lord Turner.

This proposed a rise in the retirement age beyond 65 to 68 or 69; a restoration of the link between the annual uprating of state pensions and earnings, rather than prices; an associated limit to means testing through pension credits; and a new low-cost national pensions scheme.

The restoration of the earnings link has been backed even by those who favoured its end 25 years ago, such as Andrew, now Lord, Turnbull, the former Cabinet secretary who was then a Treasury official.

His argument, put forward in a Lords debate earlier this month, is that increasing longevity and uncertainties over investment returns make it much harder to place the risks and burdens of provision on private sector employers.

Hence, the basic pension should be raised, not least to reduce the need for the means-tested pension credits and to provide an incentive for private savings.

Brown’s main worry is affordability. He has wanted to avoid adding to public spending demands at a time when the overall budget is growing more slowly.

After a long series of meetings, Brown and Blair have agreed a compromise. The basic Turner plan has been retained but the restoration of the earnings link might be delayed until 2012 at the earliest, while the state retirement age might start being raised in 2025, about five years earlier than Turner envisaged.

The white paper on May 22 will also set out proposals for the new national pensions savings scheme, although legislation on this may be delayed to allow more time for consultation.

This deal has been presented by both the Blair and Brown camps as a sign of their ability to work together — the much trumpeted ‘orderly transition’. The compromise is significant, although it could be more the exception rather than the rule.

Moreover, do not regard this is as the last word on pensions. Dates could move. And there could be pressure to reopen last autumn’s deal on civil service pensions, as Turnbull has urged.

The other early test of Blair’s authority will come on May 23 and 24 when the Education and Inspections Bill returns to the Commons for its report stage and third reading.

Labour MPs are in a far more fractious mood than when the Bill had its second reading. A big rebellion — or even a defeat — would derail Blair’s attempt to show that he can still drive forward his programme of public service reform.

Being busy is not the same as being in power.

Peter Riddell is chief political commentator of The Times and author of The unfulfilled prime minister –Tony Blair’s quest for a legacy

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